Deputy Minister of Agriculture Rustem KURMANOV: THE AGRARIAN RECEIPT TO HELP FINANCE AGRICULTURAL PRODUCE THROUGH HARVEST SALES BEFORE ITS ACTUAL GATHERING

In Kazakhstan it is planned to introduce a new tool for financing farmers - electronic agrarian receipts. The corresponding bill initiated by the members of the Majilis [the lower chamber of Kazakhstan's Parliament] has already been devised and will be soon submitted to the Parliament for consideration. Deputy Minister of Agriculture Rustem KURMANOV talked about the types of agrarian receipts for agricultural producers and conditions of their issuance in an interview with Interfax-Kazakhstan.

- Rustem Jomartovich, tell [us] what is an electronic agrarian receipt and when is the launch of this tool planned?

- An electronic agrarian receipt is a new financial tool aimed at expanding access to financing the agro-industrial complex entities. The draft Law on Agrarian Receipts was initiated by the Majilis members ; now it has already been agreed with all of the interested state bodies, and a conclusion from the government has been received. We expect that in the third quarter of this year a working group will be initiated for the document review. It is expected that we will be able to implement the agrarian receipt tool from 2020.

- Who can count on a loan through such an agrarian receipt?

- Similarly to grain receipts, an agrarian receipt will be issued on the basis of two counter-orders. On the one hand, it will be a farmer who wants to get fertilizers, seeds or financing with his property put up as security. On the other hand, it will be the same trader, either a supplier of fertilizers seeds, or a bank, or another farmer. In general, any natural or legal person who is ready to release his free money or commodity resources into circulation at certain interest and earn a profit from it.

In international practice, this tool is actively used by the countries with a high level of agricultural development and the world leaders in the agricultural products exports. So, successful experience in the agrarian receipt implementation is available in Brazil, as well as in Ukraine.

-Based on the experience of these countries, will two types of agrarian receipts be introduced as well in Kazakhstan?

- Yes, indeed. It is planned that the agrarian receipts will be divided into commodity and financial. The commodity agrarian receipt will establish the liability of a debtor to hand over agricultural produce to a holder on terms determined in it and is issued separately for each type of agricultural produce. Through the financial agrarian receipt a debtor will be obliged to pay a sum of money on certain terms and conditions.

- Tell [us] about the algorithm for the issuance of agrarian receipts, and for how long will they be issued?

-Through the agrarian receipt farmers are given the opportunity to sell agrarian receipts with their following redemption by supplying agricultural products or paying debts. In other words, the agrarian receipt helps finance agricultural production through harvest sales before its actual gathering (with a future harvest put up as collateral).

At the first stage, a farmer initiates the issuance of an agrarian receipt through the information system, which is deemed valid from the date of its registration. Further the system, integrated with databases, checks out information, sets the agrarian receipt limit value, imposes a burden on collateral and registers the agrarian receipt. After the purchase of the agrarian receipt by a lender, the return of funds or goods is also carried out using the information system. In case of non-fulfillment of obligations under the agrarian receipt, a holder is entitled to sell collateral as prescribed by law.

Herewith restrictive mechanisms will be envisaged based on statistical data for the previous 3-5 years in terms of yields and costs, namely, the issuance of agrarian receipts will be carried out to the tune of no more than 30-40% of a planned yield, that is, income.

- In general, is the mechanism of issuing a bill of exchange the same as that for grain receipts?

- Yes, but, unlike the grain receipts, the agrarian receipt certifies the holder’s rights to receive agricultural products and makes it possible to pay money in certain amounts and conditions. Herewith this grain receipt confirms the ownership right to a certain amount of grain.

- What effect is expected in the ministry if the bill is passed?

- Absolutely, the volume of extra-budgetary financing in industry will be increased; the list of financial tools in the agricultural market will be expanded. The system of ensuring the property interests of investors will be strengthened, and the farmers' income will be increased.

In addition,. And for investors and lenders the agrarian receipt will reduce risks and ensure their profitability also, what is substantive, the investment attractiveness of agricultural production will be increased.

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